With colleges at risk of closure, applicants should ask these 5 questions

I recently took part in online presentation by the editors of Inside Higher Education, a prominent journal reporting on all things in higher education. The purpose of the presentation was to advise college representatives how to make college affordable. There were no clear answers.

While tuition rates at public four-year colleges and private colleges have had the lowest percentage increase in 30 years and the average sticker price for community colleges has been frozen in 14 states and many local districts, the fact remains that this is not what parents and students believe to be the case. Their perception is based primarily on reporting in the media that focuses on the extreme cases of graduates carrying $75,000-$100,000 of student loan debt while being unable to find a good paying job. In fact, the average student loan debt is $32,731 (as of the third quarter 2019, Federal Reserve & New York Federal Reserve).

Compounding the public’s perceived extravagances of colleges is the fact that virtually every college in the country is experiencing significant to severe budgetary shortfalls. While the pandemic has certainly been extremely costly to the colleges, one of the editors emphasized, “Most of the issues in higher ed predated COVID-19 and will outlive COVID-19.” He is correct in this because COVID-19 has only made visible the elephant in the room that is the failure of higher education to address serious fiscal issues many years ago.

Why is this important to parents and students planning to attend college or who are already there? As with any problem that is allowed to become more serious over time, the moment when it can no longer be ignored is inevitably painful. In June, Fox Business News reported that a spokesperson for the American Council on Education, the main higher education lobbying group in the United States, told World University Rankings that losses across higher education of $50 billion are probable because of the pandemic.

The Chronicle of Higher Education reports that four-year private nonprofit colleges rely on tuition and fees for about 30 percent of their revenue at a time when freshman enrollment has dropped more than 16 percent from last year and a month into the fall semester, undergraduate enrollment overall was running 4 percent below last year’s levels, according to the New York Times.

Nor is the outlook bright as Moody’s Investors Service just released a report on the fiscal health of colleges and universities and forecast that approximately 75% of private colleges and 60% of public colleges expect net tuition revenue to decline in fiscal year 2021.

The result is that colleges must find ways to reduce costs while at the same time incurring great costs due to the pandemic. This will inevitably impact teaching and services at thousands of colleges across the country. The wealthiest colleges, which typically are also the most selective, will experience the least stress. But state colleges and universities will face serious budget cuts. The Institute for College Access & Success has said that according to the Center on Budget and Policy Priorities, “State budget shortfalls may total about $650 billion over the next several years.”

Small private colleges that don’t have significant financial reserves will be at greatest risk of either closure or merger with a financially stronger college. Edmit, a college advisory company, predicted earlier this year that at least 345 private nonprofit colleges could close or merge within six years.

Therefore, the questions you should be asking as you consider colleges to apply to (or return to) include:

  • Is a program/major you are considering likely to be closed before you graduate?
  • Are the sizes of classes likely to increase?
  • Have there been reductions in faculty and staff? Are any anticipated?
  • Has enrollment at the college been stable or increasing in recent years? What was the decline in enrollment entering this academic year?
  • In subsequent years, will financial aid that does not include loans be comparable to my first financial aid package?

Unfortunately, colleges probably will be unable to provide definitive answers to any of these questions. Nevertheless, ask the questions. Regardless of the kind of answers you get, these are the kinds of issues to pay attention to when considering any college.

Important! Talk to your school counselor. They miss you.

This afternoon I participated in a lengthy conference call with some 35 school counselors and financial aid advisors, and was I ever surprised. These counselors from all across Pennsylvania told the same story: they have not heard from their students and parents nearly as much as they believe is necessary to complete college applications and to properly fill out FAFSA forms. (The FAFSA is the Free Application For Federal Student Aid form required to be eligible for any college financial aid.) Your school counselor wants to help.

It seems that one of the effects of remote/hybrid learning that we have all been experiencing is that students and parents have not been reaching out for the assistance that is available to them. Perhaps the stresses of the pandemic, working from home and, perhaps, lost income have made everyone want to simply avoid these tasks. And certainly applying to college and applying for financial aid are difficult tasks in even the best of times.

A primary concern the counselors expressed is that as deadlines to submit college applications and financial aid requests come closer, students and parents will hurry to get the forms completed and, in the process, will not complete them properly. A hurried application to college could result in a denial instead of an acceptance, and a FAFSA form that contains errors or is incomplete might be returned for corrections. Lost time in submitting the FAFSA form risks losing the financial aid needed to attend a college.

Applications to college are down across the country for a variety of reasons, all related to the pandemic, and how this will impact college admissions and financial aid offers is unknown. For parents and students who have questions about whether they should apply to college this year and questions about other alternatives, it is imperative that you contact your school counselor to help you think through these questions and make a plan to proceed.

Perhaps the right answer for you is to begin college locally at a community college. But that raises questions of transferring credit to a four-year college. It’s a complicated question your school counselor can help you with. Perhaps the right answer for you is to postpone attending college for a year. If so, you’ll need counseling to figure out how best to spend the year. Remember, if you plan to start college one year after high school graduation, you’ll be filling out applications and FAFSA forms just 3 to 4 months later. You’ll want to use that time well, both for yourself and for the story you will tell in your college application.

Breaking – College Board Cancels At-Home SAT Testing

The Washington Post reported early this afternoon that the College Board would not conduct at-home SAT tests this summer and fall.

The College Board explained that it was concerned that many students would not have reliable internet service for a three hour test. In fact, the recent College Board’s Advanced Placement examinations done at home met with many problems when students were unable to submit their work due to computer problems. A great deal of criticism followed.

The Washington Post quoted David Coleman, Chief Executive of the College Board, as acknowledging, “We know demand is very high and the registration process for students and families under this kind of pressure is extremely stressful.” He continued, “There are more important things than tests right now. … We therefore are asking our member colleges to be flexible toward students who can’t submit scores, who submit them later, or who did not have a chance to test more than once.”

When adequate technology to conduct at-home testing will be available is speculative. Students should plan on taking their SAT tests in person at their schools or other testing center.

The ACT has said it is planning at-home testing “if necessary,” but it is unlikely at-home testing will be possible.

Good News! Loan Rates Reduced

At a time when we can all use some good news, here’s some.

NASFAA (Nat’l. Assoc. of Student Financial Aid Advisors) advised yesterday afternoon that interest rates for federal loans disbursed on or after July 1, 2020 will drop sharply. The rate for undergraduate Direct Loans will drop to 2.75% and the rate for parent/graduate PLUS loans will drop to 5.30%. The interest rate for graduate/professional Direct Unsubsidized Loans will drop to 4.30%.

May 1 Decision Day — Not!

May 1 date for blog

May1 has traditionally been the deadline for students to tell colleges where they plan to attend college in the fall. This year, however, that deadline should be considered flexible. More than that, students and their families should be advising the colleges they wish to attend that they will be postponing their decision until they know more about whether the college will open for the fall semester, whether courses will be taught in person or online and whether there will be dormitory facilities available. (There are lots of other questions, but these will do to start.)

Survey after survey has revealed that many students are very reluctant to commit without knowing what the college will be able to provide in the fall. You should be too.

A poll conducted in March by the marketing and research firm SimpsonScarborough revealed dramatic findings for high school seniors who were planning to attend college before the Covid-19 pandemic hit. Twenty percent of those surveyed believed that because of Covid-19 it is likely or highly likely they will not attend a four-year college in the fall, but will, instead, attend a community college, take courses online or not attend college.

Even students who have already paid deposits are rethinking their decision. A survey of 1,171 American high school seniors released today reveal that 12% of students who paid a deposit changed their minds and no longer plan to attend a four-year college full time. Art & Science Group, which did this survey, also reported in a press release that “for all but 400 institutions that have extended their deadline to June 1, over four-fifths of non-depositors have expressed doubts about their ability to attend their first-choice school.”

While it is difficult to contact colleges by phone because they are closed, families should be contacting the colleges the student wishes to attend in order to get clarification about these and other matters. That said, the fact is that nearly all colleges are still trying to decide what they will be able to provide when college reopens. In these circumstances, the traditional May 1 deadline cannot be what it used to be, nor should it.

Today’s SATs Delayed 3 Hours in Hong Kong

Today’s SATs were delayed about three hours in Hong Kong because the subway system had been shut down by the authorities in response to protests by thousands of citizens opposing the heavy hand of China in Hong Kong.  Hong Kong is 12 hours ahead of eastern daylight time.

The Wall Street Journal reported, “Thousands of students from Hong Kong and mainland China take the test each year in a cavernous exposition center near the airport.” Imagine the stresses on these kids as they went in to take their SATs.

If you haven’t been following the protests in Hong Kong, you should be. Why? Because of their effect on China. The protests take place on the weekend and are now in the 18th weekend. They began in opposition to a China-sponsored bill that would have allowed people to be sent for trial in mainland China’s opaque justice system. Additional civil rights demands have been added as the number of protestors has grown to tens of thousands.

Rising Seniors! Listen up!

The first College Board Scholarships Deadline is July 31. Don’t miss out.

The first scholarship, the Build Your College List scholarship, will close on July 31st for the class of 2020. Be sure to build your list of 6+ colleges on BigFuture to be eligible for the $40,000 Complete Your Journey scholarship.

You must participate in all six scholarships to be eligible for the $40,000 Complete Your Journey scholarship, but if you miss the July 31 deadline, there are five more drawings for scholarships, each with its own deadline.  So, check out the College Board Opportunity Scholarships website for the rules.

The College Board Opportunity Scholarships program is open to all class of 2020 students in the United States, Puerto Rico and the US territories. Students in the class of 2021 will be eligible next year. For more information, please see Official Rules.

Good luck.

The Thrift Shop – Where your kids can learn about money

Personal finance is a subject many parents want to avoid, even if not consciously. Sometimes it’s something parents don’t speak about too much even between themselves, but it surely is a subject most parents avoid discussing with their children. This is a mistake.

Survey after survey reveals how parents avoid discussing money with their children.

According to the 11th annual (2019) T. RowePrice Parents, Kids & Money survey, when asked how often do you discuss money or financial topics with your child, 8% of the parents surveyed said never; 28% said once a month or less; and 30% said a few times a month.

Perhaps even more worrying is the fact that most of us simply do not have sufficient knowledge to deal with personal finance issues. For example, the 2016 National Financial Capability Study done by FINRA’s Investor Education Foundation found that just 37 percent of respondents are considered to have “high financial literacy,” meaning they could answer four or more questions on a five-question financial literacy quiz.  This is down from 39 percent in 2012 and 42 percent in 2009.

Recently, I was in a used furniture/thrift shop that had a whole array of things for sale, from small, used toys to comic books and paperbacks and furniture big enough that you needed a truck to take it home. What I saw in the store was absolutely wonderful. The toys, some from yesteryear, cast off knickknacks and a rolltop desk that looked like it came from an old movie were all very interesting, but what was truly wonderful was the interaction I watched between a mother and her young daughter and son (we’ll call them Emma and Billy). They were about six and eight years old.

“Now, you each have 10 cents to buy something with,” she told them.  They began looking about a corner of the store that was full of little push toys, stuffed animals, storybooks and a seemingly endless cornucopia of everything a little kid could want.

Billy picked up a truck almost immediately. It was a beauty, but mom reminded him, “That’s 50 cents. You can’t buy that.” Disappointed, he put the truck down and continued to look. Meanwhile, sister was fascinated by a set of colorful stickers you could do almost anything with. The price, 10 cents. Perfect!

By now, Billy had found a package of baseball cards and a little pinball machine, each 10 cents. The price was right, but the dilemma was frustrating. I could see it on his face, but in a few moments the package of baseball cards was back on the shelf and he was running to mom with his purchase.

If you’re reading this, your children are likely older than Emma and Billy but however old they are, it’s never too early to start teaching them (and yourself, if necessary) about personal finance. Financial literacy enables you to make wise decisions about what to buy and what the consequences of your purchases are going forward. I suspect that when it comes time for mom to speak with Emma and Billy about post-secondary education, whether it’s college or some other choice, they’ll be able to speak to each other freely, acknowledging that the financial decisions they are considering mustn’t become a burden in the years ahead.

We will speak a great deal more about financial literacy in coming blogs, but to get you and your children started, you might want to take a look at Jump Start! Financial Smarts for Students (https://www.jumpstart.org) and Schwab MoneyWise – the Teaching Kids section (https://www.schwabmoneywise.com). These are sources of good information, but don’t stop here. There are other quality sources to consider.

Bigger news than the college admissions scandal

As those indicted in the college admissions scandal continue to come into court in Boston to enter their pleas, the story continues to be front page news. But for all of the headlines and talk on television and in social media, the BIG college news had actually been made one week before the United States Attorney spoke in Boston and continues to go largely unreported.

Though unreported, that story will have very real consequences for the college landscape going forward and, therefore, for parents and students preparing for college.  The story was the statement by the president of the American Council on Education, Ted Mitchell, when he said higher education must recognize that it no longer is the sole arbiter of what the content of higher education will be.

To understand the deep meaning of this statement is to understand that colleges and what they teach will no longer be decided alone by college presidents and college faculties gathered behind the ivied walls of academe. Instead, going forward, others, outside the walls, will change what is taught and how it is taught.  Think of online courses, certifications instead of degrees, students who study at various times while they pursue careers and a host of new possibilities.  And think of the cost of earning a degree or certification, or both, going down even as the cost of books, rented or obtained in digital formats, also become more affordable.

The future of college like the future of work is full of excitement, accessibility and opportunity.  But while its coming is inexorable it will not be without objection, false starts and the need for persistence on the part of all the players.  For more of this and of coming changes in how we will pay for college, return for more blog posts here.

The College Admissions Scandal the Media Covered . . . and the Ongoing One They Missed

By this time, everyone knows the facts of the college admissions and testing scam engineered by William “Rick” Singer’s Edge College & Career Network and his “side door” to elite colleges which he promised the Key to for parents who paid from $75,000 to more than $1 million for his services.

The college admissions and test taking scam revealed nearly a month ago in Boston was shocking, no doubt about it. Columnists could talk of nothing else for days. But the story’s allure to the media and the rest of us, I guess, was the unfairness of it all, the brazen immorality, and, let’s face it, the voyeuristic glimpse into the lifestyles of the rich and famous.

It doesn’t excuse anything, but relatively few people were involved. After all, how many of your friends are conniving to the tune of half a million dollars to get their kids into college? None of them.

Yet self-appointed experts deemed the scandal “a staggering indictment of higher education and American education policy generally.”  No, it was a staggering indictment of some 50 parents, coaches and at least one college official.  (More indictments are anticipated.)

Do you want to know what the ­real indictment of higher education is? The scandal that may very well in some way affect you and your child and everyone who’s working so hard to give their kids the best chance at life?

Consider this:

— one-third of entering college freshman transfer after one year (typically, just 43% of their credits go with them)

— only 60 percent of first time, full time freshmen graduate and too many of them take six years to graduate

— far too many college freshmen, ill-prepared by their high schools yet admitted to their colleges, are then left with too little support and drop out.

— thousands of students each year carry more than $30,000 of student loan debt due, at least in part, to the financial aid policies of the federal government and colleges and to the failure of school districts to educate their taxpaying parents about the complexities and financial dangers inherent in the college financial aid system.

— According to a report just released by the Urban Institute, a Washington, DC, think tank, 62% of parents of college students today borrow more than what the federal financial aid formula determined they could afford. Nearly 800,000 parents borrowed an average of $16,452 during the 2017-18 academic year through the federal government’s Parent PLUS loan program.

These are some of the scandalous facts we should really be concerned about.

But there is reason for hope.  A glimpse at that is the subject of the next post.